Sustainability of primary sales take-up, prices unclear: president

Singapore

THE jury is still out on whether the recent recovery in the take-up for developers' projects is sustainable, Singapore's developers body flagged on Thursday.

Clouding the outlook now are the substantial new supply coming onstream and the prospect of a prolonged period of slow economic growth.

"It is too early to conclude that recovery in primary sales take-up and current prices will be sustainable," Augustine Tan, president of the Real Estate Developers' Association of Singapore (Redas), told industry players at the association's 57th anniversary dinner at Ritz Carlton Millenia.

"This year, Singapore's economy continues to move slowly due to a confluence of global uncertainties, social and political insecurity and tension in the international arena. The weak market will cause asset values and rentals to keep falling, create financial stress on businesses which will inadvertently affect employment," Mr Tan said, citing weaknesses across office, retail, industrial and residential markets.

Official data last month had shown prices and rents of private homes falling more steeply in the third quarter from a quarter earlier, with 12 consecutive quarters of decline culminating in a 10.8 per cent drop in prices and a 10.7 per cent fall in rents since the peak of Q3 2013. This came on the back of a supply pipeline of uncompleted 43,693 private residential units, of which 20,577 units remained unsold.

Giving his regular update on the punitive fees that developers face for unsold units, Mr Tan said that as at end-October, some 500 unsold units across 12 developments will be affected by the qualifying certificate (QC) conditions by the end of this year, with estimated charges amounting to about S$47 million. And about 4,000 unsold units in 42 developments will be impacted by the remission claw-back of the additional buyer's stamp duty (ABSD) by 2018.

As at Oct 27, the government has collected about S$58.2 million in extension fees under QCs this year, up from just S$24.9 million in the whole of last year, according to the Singapore Land Authority (SLA). To avoid paying hefty extension fees, several developers have either directly or indirectly offloaded their units in bulk.

Some developers also observed the market's wobbliness. UOL deputy group CEO Liam Wee Sin noted that the performance of recent launches has been mixed. "It means if you get your product, price point and location right in the micro-market, you can create some success factor even in a sluggish market."

Qingjian Realty general manager Li Jun noted that notwithstanding strong take-ups in recent launches, the overall number of launches this year were fewer than in previous years. He expects to see fluctuations in take-up rates for upcoming launches. Qingjian's executive condominium (EC) project in Choa Chu Kang Avenue 5 will likely hit the market only next March or April.

At the Redas' dinner, several awards were given out to industry leaders, including the Honorary Award to the late Kwek Leng Joo, former deputy chairman of City Developments Limited (CDL) and a former advocate for corporate social responsibility and environmental sustainability.

The Redas Lifetime Achievement award, which recognises significant and on-going contributions to the community, environment as well as to the association over the years, went to Kwee Liong Keng, managing director of Pontiac Land Group since 1972.

Redas also conferred Luminary Service Awards to five industry leaders who have served on its management committee for more than 15 years. They are CDL group general manager Chia Ngiang Hong; Allgreen Properties CEO Khor Thong Meng; Bukit Sembawang Estates CEO Ng Chee Seng; TCC Group senior adviser Lim Ee Seng, who is former CEO of Frasers Centrepoint Limited; and Habitat Properties Pte Ltd executive director John Khoo.